Houston officials have blocked the release of letters detailing weaknesses in the city's financial accounting even though other large Texas cities routinely share such letters as a matter of transparency.

"What are they trying to hide, if anything?" asked Kelley Shannon, executive director of the Freedom of Information Foundation of Texas. "The financial business of a government entity is everybody's business. It's our money, and it's our government."

State law requires public agencies to hire an external auditor to review finances each year, ensuring that governments accurately portray their fiscal health in reports to leaders and the public. When that audit is complete, the full report is accompanied by a management letter that notes any apparent problems with accounting procedures uncovered while testing the accuracy of financial statements.

A management letter obtained by the Houston Chronicle and submitted to city officials in June 2007 - when Mayor Annise Parker was controller and Controller Ronald Green was a councilman - highlights the type of information being withheld from the public.

Auditor Deloitte & Touche told city officials it found "significant deficiencies" in city accounting and that operations in 2006 were "not adequate to ensure that accounting transactions are being properly captured and recorded."

The firm called the conditions it found "a material weakness," the strongest term used by certified auditing professionals to highlight potential problems they discover outside the scope of their intended review.

Though Green previously had said he supported the release of the letters, he has deferred to the city attorney's office, which sought an opinion from the Texas Attorney General's Office on whether the city was required to release them.

Green last week did not respond to questions emailed to his office seeking further explanation of his stance, instead releasing a two-sentence statement. "Heretofore, Management Letters have not been disclosed based on direction from the City Attorney and Texas Attorney General. The City of Houston will continue, until advised otherwise."

State backs city

The attorney general's office earlier this month issued an opinion saying the city did not have to release the audit letters.

"This is a discretionary section that city may elect to raise. It is not required," wrote attorney general spokesman Jerry Strickland. "If other cities choose not to raise this exception and would rather release similar information, they have that option."

A spokeswoman for Parker did not return calls Monday requesting comment on whether the mayor would step in and release the records.

Ideally, weaknesses highlighted in an audit letter would be a starting point for a controller or other city officials to dig deeper and propose reforms as necessary, said Steven Craig, a University of Houston economics professor.

"Just because there's a complaint on the outside audit letter doesn't mean there's a disaster by any means," he said. "But when you release one and it has a list of 25 weak points, people are going to look at previous letters and maybe say, 'These are the same things we saw 25 years ago.'"

Bill Aleshire, an Austin attorney who volunteers with the Freedom of Information Foundation, said he was shocked to hear Houston was blocking the public release of audit management letters.

"I was a county judge and tax collector in Travis County. We never thought to make an issue of it," he said. "Shame on the city of Houston for trying to hide the independent auditor's comments from the taxpayers."

Fort Worth and San Antonio post copies of audit letters on their websites. Austin mailed copies of letters from the last five years within days of a Chronicle request. A public records request to Dallas is still being reviewed, but nothing yet indicates the letters would be withheld, said a public records director.

Last October, City Controller Green refused to release the letters from the last 10 years when frequent city critic Bob Lemer and, later the Chronicle, requested them under the Texas Public Information Act.

At the time, Green said he believed the records should be public but deferred to the decision of the city attorney's office and Texas attorney general. "I do not practice law here," he said. "When it comes to Bob Lemer, he's still looking for ways to gain legal standing over the city on Proposition 2."

Bolsters argument

Lemer, a retired partner at Ernst & Young, said the refusal to release the letters bolsters his arguments that the city is hiding the extent of its financial troubles.

"They will not let the public know what a horrible mess the entire accounting system is," he said.

In its letter seeking an opinion from the attorney general, the city attorney's office cited an exception to the Texas Public Information Act allowing cities to decide whether to release "audit working papers," generally seen as communications with city employees that auditors use to prepare their reports or incomplete drafts of their reports.

After the Chronicle asked City Attorney David Feldman for comment last week, he said he personally would review the letters and release them if they did not contain matters linked to any pending litigation.

"It is not a matter of whether I believe the discretion should exist," Feldman said, pointing to the attorney general's ruling. "It's designed as such under the law."